The Securities & Exchange Board of India (Sebi) may soon release guidelines for credit rating agencies. In its recent communication with these agencies, the markets regulator has sent its suggestions to improve their operations and sought their observations on the same, according to two people with the direct knowledge of the development.
“The communication included key issues like uniform industry policy for suspension of credit ratings, and compulsory disclosure of ratings that are unaccepted by companies which are graded, among other propositions,” said one of the two persons.
This is a second round of communication between Sebi and rating agencies. In October-November, rating agencies had submitted a set of collective suggestions after discussions among themselves under Sebi’s guidance.
While Sebi did not communicate a time line for the impending road map to agencies, given that the regulator has listed “raising standards for credit rating agencies (CRAs)” as part of its action plan for fiscal 2016-17, the guidelines could be expected soon.
Among the key discussion points was the argument whether credit rating of a listed company should be suspended as its financials are available in the public domain. And that this information should help rating agencies form a fairly healthy assessment of the credit profile of the company.